Author argues AutoTrader's ~40% decline is unjustified given zero debt, buybacks, pricing power, and only 0.7% customer churn from Deal Builder, and is buying the stock.
AUTO.L — LONG The author argues AutoTrader's ~40% decline is unjustified because the company has zero debt, is buying back shares at depressed prices, and pushed through a 5.5% price increase showing pricing power. The main company-specific issue, the Deal Builder rollout, has only caused fewer than 100 of 14,000 customers (0.7%) to leave or downgrade, which the author believes management will fix and recover. A reverse DCF at ~470 GBX implies the market prices ~0% free cash flow growth for five years, which the author sees as overly pessimistic. Main risk is the Deal Builder rollout causing further customer losses or analyst downgrades.
Please convince me not to keep buying this stock at this price.